We are all faced with changes and there are many books which offer advice. One of them is called Switch – How to Change Things When Change is Hard by Chip and Dan Heath, Random House, Toronto, 2010. One of the reasons to read the book is it helps define a road map to get the change needed. In the book they believe the brain is made up of two parts and it generally functions as an Elephant and a rider. The rider can direct the Elephant but the Elephant has a mind of its own, when the two parts work together – magic can happen. In many situations, it is not that organizations do not want to change – it is only targeting one portion of the brain be it the rider or the elephant and unless they both receive attention the change will not happen or last.

The 3 stages to facilitate change Mr. Heath believes are:

1. Direct the Rider:  what looks like resistance is often lack of clarity or communication. Provide crystal-clear direction.
2. Motivate the Elephant – what looks like laziness is often exhaustion. Engage their emotion to go in the direction.
3. Shape the Path – what looks like a people problem is often a situational problem. The authors call the situation the path.

If all three happen, then dramatic change can happen even when you have little power or resources.

A wonderful example is Jerry Sternin was working for Save the Children in Vietnam. His job was to fight malnutrition and he was given 6 months to do his work. It would be easy to say malnutrition was the result of poverty, sanitation, lack of clean water or large institutional fixes that require dollars for infrastructure. Mr. Sternin had a small budget and  travelled to rural villages and measured babies. When they came back eventually someone asked  did you find very, very poor kids who are bigger and healthier than the typical child? The answer was yes, so he said let us see what they are doing. It turns out the mothers were feeding their babies 4 times a day (smaller amounts at time) and adding shrimp, crabs and sweet-potato greens. The result Mr. Sternin devised training programs for mothers to add seafood and greens to the diet and feed smaller amounts. The result was 6 months later 65% of the kids were better nourished.

Another example is women with breast cancer at the University of California at San Francisco Hospital.  The good thing is the treatment was wonderful, the bad thing is similar to many large institutions, all the departments were not in the same building and for very good reasons were run according to their department needs. Laura Esserman decided the concern should be the patient first. They started small and the Breast Care Cancer Center grew to include all the disciplines on one floor working to help ensure the needs of the women who come in, their needs are first.

Another example is BP Petroleum. BP drills wells to bring oil and gas out of the earth. If they are successful, they make lots of money. However, Ian Vann BP’s head of exploration decided to change the rules and rule should be No Dry Holes. The reality at the time was 1 in 5 did not work, but people thought at least the other 4 are making money. To do No Dry Holes – greater emphasis was put of the mapping and aggregating the information they had and sharing it with the others. No dry holes meant drilling in the best locations first and using all information possible. There are still dry holes, because you do not know everything till you drill, but there far less and less money is wasted.

Linking to dividend paying stocks, in the book there are many examples however the ideas are does the company have good direction, what are the consequences of not making better decisions and are they doing better? Often times the process of the change or how sustainable is the change will make the difference. As you examine the companies you have investments in, what are they doing? what does the annual report reveal? what stories do you hear or read about those companies in relationship to the change process?

There are more questions than answers, till the next time – to raising questions.